CPI shelter lag
MacroDefinition
CPI shelter component (33% of CPI) lags real-time market rents by ~12 months. The BLS rotates through samples slowly, so 2022 market-rent declines didn't show up in CPI until 2023-2024.
Practical implication: in 2024, headline CPI was running 3% partly because shelter was still printing 5%+ even though Zillow rent indices had been negative for a year. Smart traders looked at "supercore" CPI (ex-shelter) for cleaner signals.
Practical implication: in 2024, headline CPI was running 3% partly because shelter was still printing 5%+ even though Zillow rent indices had been negative for a year. Smart traders looked at "supercore" CPI (ex-shelter) for cleaner signals.